In the Industrial Age, scalable efficiency drove value creation. The bargain of the Industrial Age was that, if consumers wanted affordable products and services, we would have to settle for standardized products and services – one size fits all. You can have any color as long as it’s black. It’s a bargain that drove the growth of mass consumer societies in developed and developing economies.

And it shaped the scalable efficiency model that drives virtually all our institutions today – the key to success is to become more and more efficient at scale. Efficiency requires tight specification and standardization of tasks throughout the institution and tightly integrating those tasks into end to end business processes. It is very much supply driven, since the demand was willing to settle for standardized products. The winners would be those who could produce the most cost-efficient products at scale. In a world of standardized products and tasks, context was largely irrelevant, a distraction. Focus on the standardized product and process.

The world is changing

Now, that’s all changing. The forces shaping the Big Shift are progressively undermining standardization and efficiency (as conventionally defined) as drivers of value creation. As consumers, we’re gaining more and more power and we’re less and less willing to settle for standardized products and services – we want offerings that are tailored to our unique and evolving needs. On the supply side, digital technology is making it easier and far more affordable to produce highly personalized products and services. That’s leading to more and more fragmentation in product and services businesses, something that I’ve explored here.

As these forces play out, context is becoming more and more central to value creation. If we don’t pay attention to the circumstances surrounding a person or an event, we’re unlikely to understand how to create the greatest personalized value. Those who are most insightful and adept at understanding context, will be those who create the most value, both for customers and for themselves.

Exploring the many dimensions of context

So, what is context? In my experience, we’re much too simplistic in our framing of context. Context tends to be viewed as a snapshot of the circumstances immediately surrounding an individual or event. If you want to serve the needs of a consumer who is cooking a meal, it helps to understand what meal is being cooked in the moment and what that consumer values in terms of the meal that will be produced. Certainly that helps, but is that all there is?

Context across space. Context is fractal – there’s a never-ending series of broader contexts within which any specific context is embedded. Take the context of the consumer cooking a meal. Who else might be sharing in that meal? What is their broader network of friends and family and how might that shape the way they view this meal? What is the broader community that these friends and family reside in and how is that shaping the meal experience? What region and country does that community reside in?

Context across time. But that’s not all. Context doesn’t just expand across space at any point in time. It also expands across time – both into the past and into the future. We have a much deeper understanding of a person or event if we can situate them in a broader arc of experiences that are playing out over time. It’s especially valuable if we can anticipate how the context might evolve so that we can address needs that haven’t yet surfaced, but will soon become very important. In a more rapidly changing world, we need to understand that context is dynamic – it will evolve rapidly and could fundamentally change in a short time span.

Context as a complex adaptive system. We don’t just need to understand the components of context, we need to understand how those components interact with each other and connect into ever more complex systems and understand how those systems are evolving. In short, we need to understand context as a complex adaptive system.

Context within. A key element of these complex adaptive systems is people. We are complex in isolation but become even more complex in the context of our interactions with others. Our understanding of context will not be complete unless we delve deeply into the psychology of the people who inhabit the context – we need to gain insight into the emotions and perceptions of their context that shape their own behavior. They often don’t see the context in the same way that we might. But we often get consumed by the “objective” elements of context, those things which can be measured and lose sight of the much more qualitative human elements of context.

Context of others. And it’s not just about customer context. As our work becomes more and more tailored to specific problems and opportunities and as we expand our ecosystems to leverage the expertise and capabilities of others in a much more flexible manner, we need to better understand the evolving contexts of everyone in our ecosystems, including the people who work within our institutions.

Context to be shaped. Finally, let me also caution against understanding context only as a passive observer. We in fact have significant opportunity to shape contexts. First we need to understand the context as it exists on its own but, if we truly understand the dynamics that are shaping the context over time, we’re likely to see opportunities to shape that context. In fact, that’s one of the reasons why I‘ve become increasingly interested in the role of opportunity based narratives – as an inspiring call to action, they can motivate people outside our institutions to take action in ways that could significantly alter their contexts.

Welcome to the Contextual Age

In this context, let me return to why I resist describing our current era as the Information Age. Coming from Silicon Valley, I can certainly understand the fascination with the proliferation of data that’s generated by our digital infrastructures. But the data is only valuable if we use it to gain more insight into evolving contexts. My concern is that we can get easily distracted by the data and focus on generating more and more of it, without understanding how to use that data to create value. True to our scalable efficiency institutional models, we’re largely using that data to drive more efficiency in our operations.

What institutions will have the greatest impact in the future? It will be those who shift their focus and learn how to harness that data to generate greater insight into expanding levels of context and to see new opportunities to add value in those contexts. In fact, the ability to generate and access much of the data that’s relevant to context will increasingly depend upon the trust of the participants. One of the best ways to build trust is to show a deep understanding of context and, even better, to deliver more value tailored to that context. We’ll never build deep trust-based relationships with others without a much richer understanding of their context. Those who do not build this trust will find it more and more challenging to access the data in the first place.

That’s why I suggest describing our current era as the Contextual Age. Yes, data and information is a key enabler of value, but it’s the deep understanding of context that will generate the value. It’s the reason we described the previous era as the Industrial Age, rather than the Machine Age. Machines were a key enabler of value but it was the industrial organizational model that generated the economic value from those machines.

Seeing more

So, if we’re in the Contextual Age, what actions should we be taking to generate value? That’s probably the focus of another round of blog posts, but let me just quickly summarize some actions that will help to gain greater insight into context.

Look ahead. Don’t get consumed by snapshots of the relevant contexts. Make an effort to look ahead and understand the forces that are shaping these contexts and what these contexts might look like many years from now. There’s no better way to create value than to anticipate unmet needs.

Look around. Don’t just look at narrowly defined contexts. Expand your horizons to look at the contexts of those contexts and how they might shape the more narrowly defined contexts. Also, explore seemingly unrelated contexts to see what insights they might offer about the contexts you’re addressing.

Look again. We often take context for granted because we’ve seen it before. We need to adopt a beginner’s mindset and explore context as it it’s completely new. We may surprise ourselves and find elements of the context that we never noticed before.

Look within. Seek to gain insight into the emotions and aspirations of the participants in the contexts you’re addressing. Objective contexts matter, but what really shapes value is understanding what motivates participants in these contexts.

Look for impact that matters. As we gain more insight into what motivates participants in the contexts around us, we can begin to understand much more deeply what value really matters to them and how to achieve an impact that will be more meaningful to them.

Look together. Find a diverse group of people to explore contexts with you. Understanding contexts is not a solitary effort, it needs to be a collaborative effort. No matter how observant any one of us is, we’re likely to find that others, especially if they come from different backgrounds and perspectives, are likely to see things that we completely missed. And encourage the group to challenge each other in terms of what they’re seeing – I call it “productive friction.” We’re likely to see a lot more if we look together.

Act and reflect. Don’t just observe. Have a bias towards action so that you can learn more about the contexts by observing how they evolve in response to your actions. And take the time to reflect on what impact your actions had so that you can gain even more insight into the context.

Bottom line

If we take context seriously, that can be a significant driver of learning. In a world that’s more rapidly changing, going exponential, as some might say, learning is an imperative. We expand our horizons and better understand the forces that are shaping the environments within which we operate. To be clear, this isn’t about learning in the form of sharing existing new knowledge; it’s about learning in the form of creating new knowledge. Every context is unique and every context is evolving at an accelerating pace. To truly understand our contexts, we need to pull ourselves out of the classroom and immerse ourselves in the context, take action based on growing understanding of the context, and then learn even more as we reflect on the impact that we’ve achieved.

If we take this seriously and mobilize others to join us in this effort, we might begin to harness scalable learning. The paradox is that scalable learning is much more efficient than scalable efficiency in a rapidly changing world. But it’s far more – it’s a way to unleash increasing returns that come from focusing on delivering more and more meaningful value in the contexts that we’re addressing. Another key dimension of the Big Shift is the shift from scalable efficiency to scalable learning as the rationale for our institutions.